Save or put it on the house?
Hi everyone
Well, Martin Hawes isn’t too impressed about our plans to buy a bigger car. Here’s what he had to say:
Steph
The first thing that you and Matt need to do is think about whether you really (and I mean REALLY!) need that new car.
Cars are the bane of every financial adviser’s life - they destroy budgets. The thing that most people forget with cars is depreciation – the moment you drive it away from the seller, it is worth less (I wonder what you paid for that car that is now worth $4,000). And it keeps on getting worth less as the weeks and kilometres turnover. Petrol, insurance, repairs and registration costs pale to insignificance compared to the loss of value over time and kilometres. Nevertheless, that depreciation is real money which has to be found when you are up for replacement.
If you add up all the costs for the car (repairs, petrol depreciation, interest if you borrow etc) you might be shocked at the total.
If you and Matt really do have to buy a car but can wait a bit, you should save for it. You should save either by use of a deposit account or by reducing the mortgage by $5,000 - having got the bank to agree that you can draw it back down when you are ready (the revolving credit facility would have been ideal for that).
If you have to have the car now, put it on the house – i.e. increase the mortgage. Home finance is the cheapest available and that will be your best form of borrowing.
But, of course this will mean that you mortgage will go to $216,000 and along with your car decreasing in value you are going backwards. That will be exacerbated by the extra interest that you will have to pay.
I had thought that you were worried about your finances and were determined to get them straight…
Martin
Mmmm, we are worried about our finances but I’m also concerned about my back! Anyway, we’ll see how the voting goes over the next day or so. Oh, and keep those comments coming (Isn’t Carla a star?).
Thanks!
Steph
posted by sortme @ 2:01 PM
13 comments
13 Comments:
You are in debt, when you get $68,000 a year... then you are a tosser and a losser.
So many have to budget on $8,000 to $12,000 a year (on a benefit). Thats paying rent/mortgage, food, clothing, dr's and run a car and they manage to do it really well.
You cant even do that.
Sorry but you and your husband are the biggest lossers in life.
Throw your credit card debt onto your home mortgage.
Keep the same car... you dont need to be up with the Jones's or Smith's or what ever your neighbour's name is. Better still walk to the local shop with your child in the pram and get your groceries done like the rest of us do it.
Sell your home and downsize.
Stop buying stuff that you don't really need. Baby can wear cloth nappies... learn to stay at home and make your own coffee and wash nappies.
Cheers and see you next week...
So how long does it take to get one's comments put up on the board for everyone to read?
How long is the delay factor???
If someone at "www.sorted.org.nz" or even 'Steph' could answer this.. it would be much appreciated.
Cheers.
(4.17pm on 11/4/06) - I posted a message about 20 minutes ago before typing up this post.
I can't believe this...
Your budget shows that at the moment you can't afford you're existing expenditure and you want to spend another $5000? Thats FUBAR even if you are fictitious.
What's next week's question?
"Well we got the car but now we have to get a double garage to keep it dry during winter - where can we get $12,000?"
sheesh
This is a WANT, not a NEED - get your virtual priorities right!
Hi and thanks for your comments.
I do read everything that goes up, and I try and post them through as soon as possible. Bit more time for replies now - so thanks to everyone who leaves a name I can reply to directly!
I don't want to buy a *new* car, I just want a different car! The 2 door thing is more than a hassle, its really tricky getting Caleb in and out safely and is a nightmare at the supermarket carpark when I can't get the door open all the way and have to lean in.
We looked at what's out there and think that if we just "do it now" it'll be off the list of things to sort out forever. So we want a car that'll last ages - not another problem for 2 years down the track. We don't have the revolving credit thing so there is this chance to put it on the mortgage now.
Thx, Steph
Get the car, i fact since you own a house, you can just put one on HP, probably no deposit too. Get a 30,000 Lexis or maybe a 45,000 Pajero, safer for the kids going to school. If you can go to a place that gives you 5 grand cash back, so you can go for a nice holiday around the north island in your new wagon.
Yeah well hey look Steph, I know when you know how things COULD be, it's hard to settle for awkward doors and things, but if you are struggling with your mortgage now, then struggle on with doors and things you'll have to. I think the difficulty is when you've lived and worked in an environment where you have the money or resources to make things comfortable and hassle-free, and suddenly you have to put up with things, it's a bit of a shock. But there you go. Could be worse eh.
Steph
The budget you prepared says you can't afford what you're spending now let alone something new.
What makes you think you can afford to get a new car when you can't even manage now?
But why do you need an expensive car? If you want a four-door, sell your car and buy something with the money you get from the sale. There's no need to spend anything extra, and just because a car isn't a '98 doesn't mean it's going to fall apart any second.
Buying an expensive car when you're trying to get out of debt is just ridiculous.
[QUOTE=steph]I don't want to buy a *new* car, I just want a different car! The 2 door thing is more than a hassle, its really tricky getting Caleb in and out safely and is a nightmare at the supermarket carpark when I can't get the door open all the way and have to lean in.
So we want a car that'll last ages - not another problem for 2 years down the track[/QUOTE]
you want want want...!!!
Life is not about wanting everything given to them on a plate... You have to earn things..
So what you have to lean into a car to put things in it..
Gee we all have had to do it, sure it is a pain in the butt. but get over it. Put the groceries and other shopping in the boot of the car. Park the car away from all other cars so that you can open up the door more... use your brain and think about it.
No one can guarantee a car will last 2 years or 5 years... you could have a prang tomorrow or 3 years down the track...
You dont NEED a another car, stick with what you have.
I wil give you some advice my Gran gave me: NEVER BUY ANYTHING UNLESS YOU HAVE THE MONEY FOR IT!!!
Learn to save money and make do... as per other comments you salary is $68.000- you have poor money handling skills and are materialistic.
Learn to be thrifty.. my car is about to die so what do I do? I use a bus (yes with a baby while studying fulltime at university and lugging around 20 tonne accounting textbooks)
steph
i have been reading this from time to time. i was under the impression that you have 2 cars & live in the central city area. if you do have 2 cars, sell one, and keep the one that is most suitable for your family. in the central city, there is an excellent bus service. nothing to stop hubby busing to work, and saves petrol money. if you really want another car, and this is a WANT not a NEED, bank the money from the sale of the other car & save for the rest of the purchase price. believe it or not, people DO cope with babies & 2 door cars. been there, done that, with a baby & a toddler.
If it was an ABSOLUTE NECESSITY, I would say put it on your mortgage - but as a new loan over 3-4 years (even less if you can manage it). Do not comtemplate taking it over the life of your mortgage (25-30 years!) - this will turn your $5000 loan into something MUCH BIGGER!! Putting it over a shorter term will allow you to repay the car back in a similar time, as you would a personal loan or hire purchase, but at mortgage rates.
But I see this as a WANT, and therefore suggest you get your current financial position sorted first, and save for an upgrade.
Sorry
Anyhow, just my thoughts... (sorry couldn't frighten you with any figures today, am away for the next three weeks without my mortgage calculators!).
JB
oh my gosh! What are you thinking??
SAVE for that car! If you put it on your mortgage it will up your repayments & over the course of your mortgage you will be paying an awful lot of interest on the car.
As for it being inconvenient to get your son in and out of the car because of not being able to open the door, well park further away! I managed to do perfectly fine with a 2 door car until we had saved up for a new car.
To help you savings start using your buggy & walking to where you need to go. The beauty of Auckland is that most places that you NEED o go are in walking distance & its a great way to get fit.
The really silly thing is that you should have made plans & put into action savings for a car when you first got pregnant and had a very good income.
I sometimes think that day to day money management should be a compulsory subject at school so the good habits are there before "real life" hits!
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